Friday Free For All

It’s time for our regular open topic Friday Free-for-all post here on VancouverCondo.info!

- But why are they really selling?
- Vancouver sales slow to 2001 levels
- Keep building stuff and they’ll keep coming
- Canadian prices (except Edmonton) rising
- 40 years terms add fuel to the fire
- TD Chief Executive gets all gloomy
- AAA rating not what it used to be
- Bernanke: Housing crash not Feds problem
- An eye out for mortgage fraud

So what are you seeing out there? Post your news, links, and anecdotes here and have a great weekend!

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165 Responses to “Friday Free For All”

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1
Re-diculous Says:
April 4th, 2008 at 5:04 am
Okay, I’m finally convinced things are changing…check out this article in today’s Province…an article that they would not dare to place a year ago:

“Housing market to sink after Games’

http://www.canada.com/theprovi.....fdcdf10c66

…I find myself humming my favorite David Bowie tune for all those RE people out there:

“Turn and face the strange CHANGES”

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2
freako Says:
April 4th, 2008 at 5:59 am
From the Sun article:

“Also, Adamache said, on average, homes are selling for 98 per cent of their list price, which is also consistent with a seller’s market.”

Reaching the bottom of the spin barrel? What a useless stat.

“People are cognizant of risks to real estate in a way that, two years ago, they weren’t entertaining,” Somerville added.”

How about you Tsur? Didn’t quite speak up then did you?

“[Sales are] still very high by historical standards,” Adamache added. ”

Yes, but dropping like a rock. You have demonstrable extrapolation skills. Use them.

Then a whole bunch of talks about a balanced market, which is I presume is a milestone the way to an inversely unbalanced market (supply exceeding demand)

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3
blueskies Says:
April 4th, 2008 at 6:28 am
freako:
good take on the obfuscation factor
the spin is starting to get me dizzy

tiny url for province article

http://tinyurl.com/45yvl2

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4
VHB Says:
April 4th, 2008 at 6:39 am
Again, what gets me is that the CMHC guys (who are paid by the taxpayer) see it as their job to work as hard as possible to outspin even the realtor organizations. Why does CMHC see it as their job to artificially pump up housing prices? CMHC is a seriously warped organization.

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5
Burden of Proof Says:
April 4th, 2008 at 7:19 am
“Why does CMHC see it as their job to artificially pump up housing prices?”

For the last 20 years or so, a free market ideology has been dominant in government and in crown corporations. The latter are expected to maximize profits. This even effects the Canadian Mint. The maximization of profits ususally comes with assuming greater risks.

Beacause of the latter, CMHC sees it as their job to pump housing prices and because declining housing prices will lead to CMHC to suffer insurance losses, their employees will loose their jobs, the CEO will be fired, if the losses are scandalous he will be called before a parliamentary committee, if its bad enough there will be an inquiry into the business of CMHC. It will emerge that CMHC big wigs have been aggressively wined and dined and sent on vacations by the big banks and therefore were in a conflict of interest when they took increasing risk.

Everyone at CMHC has an interest in keeping the boom going.

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6
Burden of Proof Says:
April 4th, 2008 at 7:24 am
The current credit bubble bust is also the bust of free market ideology - that markets should be regulated as little as possible, that the only rules should be those of economics. This was always a crock and now it is obvious to anyone as the financial system is in the worst crisis in 7 decades.

In the wake of the developing Canadian housing bust, I expect that CMHC will emerge as a neutered corporation fenced in by rigid rules.

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7
can Says:
April 4th, 2008 at 8:07 am
Calgary prices are also down YOY and the trend is negative!

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8
ReductiMat Says:
April 4th, 2008 at 8:09 am
In the wake of the developing Canadian housing bust, I expect that CMHC will emerge as a neutered corporation fenced in by rigid rules.

One would think, but don’t forget we live in the land of Angelo Mozillo, Bear Stearns and Paulson.

I suppose we’ll see how much of a Republican wannabe Harper is soon enough.

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9
pricedoutfornow Says:
April 4th, 2008 at 8:16 am
Good article, it doesn’t surprise me they printed it. The general sentiment on the street seems to be “housing will go down after the olympics” as I’m sure many of you have noticed. And as they say, buyer psychology defines the market. Guess I’ll be buying in three years with a nice downpayment (as long as inflation doesn’t eat it all up-another consequence of having artificially low interest rates for so many years)

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10
Patiently Waiting Says:
April 4th, 2008 at 8:57 am
I hear in casual conversation, over and over again, that sentiment has changed. People notice all the “for sale” signs up early this year and the lack of “sold” stickers.

I’m going over to Victoria for a few days, so I’ll have my ears perked up. We’ll see if I have anything to report.

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11
bdk Says:
April 4th, 2008 at 9:01 am
Pricedoutfornow, as you know I like to rant but will keep it short since it’s off topic.

Clean Technology/socially responsible investing and alternate energy appear to be poised to be the next bubble, if you get out in time it could work great and you could buy in at 40% off todays RE prices.

bubble 1 “the internet isn’t going away”
bubble 2 “everyone needs a place to live, the olympics the olympics!”
and next it’ll be “we only have one earth, we have to save it”

Various reasons for this idea are:
The boomers will eat it up and they have the money and a lot of them have a history of being socially active compared to their parents’ generation

People like to exit sectors where they’ve been burned and clean energy/ clean tech hasn’t burned anyone yet.

Governments will most likely help out and in some cases mandate change. For example the companies that clean the toxic water in the tar sands should have business for some time.

Blah Blah Blah
I have no way of knowing if anyone takes me seriously and I don’t know much anyways but hopefully you’ll consider the idea. I can keep going here but don’t want to put anyone to sleep.

It seems like that sector may be a good way to beat inflation while the market tanks.

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12
Edwin Bubble Says:
April 4th, 2008 at 9:02 am
Just another isolated data point, but a dear of friend of mine is in banking and has been doing loans&mortgages for years now. Nice guy, but an excellent sentiment indicator since he’s a solid follower and can be relied upon to defend whatever line he hears from the people around him, which in his case is wealthy investors and builders.

Up until just a couple of months ago he was arguing that I was mad not to buy, and that I should let him set up a mortgage for me on something, anything.

As of yesterday he now believes we’re due for a correction quite soon and that real estate is a bad thing to invest in at the moment - he talked about a real sea change in the attitudes of the people he meets with.

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13
patriotz Says:
April 4th, 2008 at 9:17 am
The current credit bubble bust is also the bust of free market ideology - that markets should be regulated as little as possible

Well of course what “free market” ideology really believes in is that market intervention is good as long as it benefits the big players at the expense of the taxpayers. Right, Al? Right, Ben? Right, CMHC?

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14
Clarke Says:
April 4th, 2008 at 9:30 am
“Free market” in contemporary practice usually means the profits are private. Losses, especially catastrophic ones, as well as some investments have a curious habit of ending up being a matter of public funds.

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15
Mold City Says:
April 4th, 2008 at 10:15 am
Great link re-diculous - the post games crash seems so obvious, and indeed it sounds like you hear more and more acceptance of that fact from investors, owners and renters, but I don’t recall seeing much about it in the local media.

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16
Mold City Says:
April 4th, 2008 at 10:27 am
VHB: Amen! CMHC has become a dangerous organization over the last few years. Why they weren’t content to let the boom happen on its own based on low interest rates and felt the need to introduce US style zero down / 40 year terms is a mystery to me. If their goal is to keep property markets up, what tools do they have left to deal with a slumping market?

In the wake of the developing Canadian housing bust, I expect that CMHC will emerge as a neutered corporation fenced in by rigid rules.

Dare to dream! CMHC holds a fair amount of responsibility for this bubble, but that doesn’t mean that there will be repercussions.

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17
Dosh Says:
April 4th, 2008 at 10:55 am
The CMHC has done exactly what it’s supposed to do and made housing more affordable for everyone. If you think prices are expensive now imagine if there was no option for lower down payments and longer terms - the monthly payment would be much higher and affordability for first time buyers would be much worse.

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18
Tony Danza Says:
April 4th, 2008 at 11:04 am
Hello Dosh,

Can you please provide data/analysis that shows how CMHC has improved affordability for Canadians since introducing the new improved lax lending standards?

Please include a sensitivity analysis to show how affordability is affected at different interest rates in the range of 0-10%. Thanks!

BTW don’t feel too bad if you’re too “realtarded” to perform such an analysis, Tsur Somerville can’t either.

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19
miracle Says:
April 4th, 2008 at 11:05 am
“The CMHC has done exactly what it’s supposed to do and made housing more affordable for everyone. If you think prices are expensive now imagine if there was no option for lower down payments and longer terms - the monthly payment would be much higher and affordability for first time buyers would be much worse.”

Harrumph. Well, that’s one way of looking at it. Another way they could have fulfilled their mandate by helping to moderate actual prices, rather than focusing on affordability. They might have contributed to this by keeping the lending standards where they were, thus keeping risky loans out of the market, thus lsowing activity and keeping the bubble from getting too large.
No?

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20
Tony Danza Says:
April 4th, 2008 at 11:18 am
They might have contributed to this by keeping the lending standards where they were, thus keeping risky loans out of the market, thus lsowing activity and keeping the bubble from getting too large.

Actually you could look at the CMHC as fulfilling their mandate by driving prices ever higher thereby sucking more and more speculators (and irresponsible FTB’s) into the market. This results in increasing inventory to satisfy the perceived demand and ultimately (after prices return to reality) resulting in plenty of affordable housing for responsible Canadians.

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21
freako Says:
April 4th, 2008 at 11:39 am
Beacause of the latter, CMHC sees it as their job to pump housing prices and because declining housing prices will lead to CMHC to suffer insurance losses, their employees will loose their jobs, the CEO will be fired, i

Well that obviously snowballs. Talking up prices will keep the portfolio safe, but then they are required to take on riskier and riskier loans. It could well be that they are just pushing doom forward, hoping to retire before it all falls apart. That is one of the problem in the corporate world. Many CEO’s are within a years of retirement and are only interested in looking good until their options are fully vested.

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22
hightower Says:
April 4th, 2008 at 11:56 am
I call bull on prices crashing after the games, thats when new people here will be buying. That socalled expert isnt even from here hes from ottawa!

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23
hightower Says:
April 4th, 2008 at 12:04 pm
That whole article in the province is bull, I can’t believe they call it a housing bubble, its probably just another guy from outside of vancouver that wants to live here and is wishing prices were lower. imagine how sorryy you would be if you take his advice and wait to buy but prices go up another 20% in that same time. if you have money to buy but you dont then your just passing up on an investment chance.

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24
M- Says:
April 4th, 2008 at 12:04 pm
Tony Danza: I like your high-level look at interpreting CMHC’s actions!

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25
jesse Says:
April 4th, 2008 at 12:09 pm
Take a look at the latest Seattle stats. Interesting to look at how fast the YOY change in price has dropped to zero.

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26
Lager not Logger Says:
April 4th, 2008 at 12:21 pm
hightower and dosh, is there any circumstance or price level that you would think vancouver real estate is overpriced at ? Or is this a magical place that warrants any price level no matter how far it is from rents and incomes?

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27
Lager not Logger Says:
April 4th, 2008 at 12:25 pm
If you’re investing in real estate shouldn’t you consider what its rental income would be? Our prices are approaching New Yorks to buy, but while CMHC says the average 2 bedroom apartment rent in Vancouver last year was $1086, Forbes shows the median 2 bedroom apartment rent in New York to be $4000.

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28
MATHAMATICAL Says:
April 4th, 2008 at 12:28 pm
Hightower,

Why would an expert from Ottawa opinion not count? Ah yes, only the opinion of poeple living in Vancouver counts. Think inside the bubble and not outside the bubble.

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29
Rob A. Says:
April 4th, 2008 at 12:29 pm
I found this blog and I don’t know what all of you are so pessimistic about. I own a condo downtown and I don’t think it is going to go down because everyone wants to live downtown. It’s where the action is! Everyone wants to live there!

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30
Rob A. Says:
April 4th, 2008 at 12:35 pm
If you want to go to restaurants and cafes, then downtown is the place to be! You can only be a bear if you don’t realize that.

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31
Anonymous Says:
April 4th, 2008 at 12:37 pm
hightower, rob a and dosh, is there any circumstance or price level that you would think vancouver real estate is overpriced at ? Or is this a magical place that warrants any price level no matter how far it is from rents and incomes?

If you’re investing in real estate shouldn’t you consider what its rental income would be? Our prices are approaching New Yorks to buy, but while CMHC says the average 2 bedroom apartment rent in Vancouver last year was $1086, Forbes shows the median 2 bedroom apartment rent in New York to be $4000.

“I own a condo downtown and I don’t think it is going to go down”

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32
Rob A. Says:
April 4th, 2008 at 12:42 pm
You can’t get a 2 bedroom apartment for $1080 downtown. Downtown is the place to be for people in the know!

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33
Tony Danza Says:
April 4th, 2008 at 12:50 pm
Rob A., I predict a flood in your future. A flood of mortgage debt over the equity in your rabbit hutch downtown. Good luck!

BTW are there any recent (last 0-5 years) home purchasers that aren’t optimistic about the near term future of Vancouver RE prices?

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34
Rob A. Says:
April 4th, 2008 at 12:55 pm
Tony Danza, don’t be such a bitter-renter, haha. Not everyone can afford the downtown lifestyle. Anyways, have a good day I have to meet my friends at the caffe.

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35
DowntownSucks Says:
April 4th, 2008 at 12:56 pm
Rob, i left downtown a few months ago after years renting there. My rent went down by over $1500 and I don’t miss a thing. Spending half day looking for parking and the other half working to pay for it is no longer my lifestyle. I simply got tired of ever increasing number of people and cars and lack of infrastructure.

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36
Rob A. Says:
April 4th, 2008 at 12:58 pm
DowntownSucks, I’m glad that you decided to do what makes you happy. Like you said more and more people want to live the downtown lifestyle because it makes them happy. It takes all types, even bitter ones I guess, haha.

cio.

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37
Anonymous Says:
April 4th, 2008 at 1:16 pm
Rob A. = Krrish2

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38
Bob B Says:
April 4th, 2008 at 1:17 pm
Rob A.
You obviously grew up in Delta and are about 21. This is your first experience outside of your parents house and your unsophisticated parents have lent you a small amount of cash to buy a small crappy condo simply because they heard that this is what people did to make money.

Downtown is the place to be, a lot of us bought a long time ago or didn’t and are choosing to invest the thousands of dollars that they are saving into other investments, yes I know this is overwhelming but there are other ways to make money.
Your inability to comprehend or answer any of the question above prove that you’re an imbecile.

You aren’t going to meet your friends at the Cafe, you are going to work at Starbucks.

Enjoy your condo, when you get off your shift look up negative equity.

Idiot

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39
Rob A. Says:
April 4th, 2008 at 1:19 pm
LMAO.

Ok, now I really have to go
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40
Worlds Greatest Lover Says:
April 4th, 2008 at 1:20 pm
Downtown Vancouver = Crack hos, homos, & hobos.

(that’s why I love it)

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41
SweetHomeKilla Says:
April 4th, 2008 at 1:21 pm
don’t be such a bitter-renter, haha. Not everyone can afford the downtown lifestyle.

I have a sister and BIL who moved to San Diego 1.5 years ago and against advice bought themselves a brand new BOSA condo. He really wishes he were a bitter renter now (she’s oblivious). Comparable units are listed at 20-45% less than he paid for his. I feel sorry for him, but I feel even more sorry for myself as it seems too cruel to phone him up and scream TOLD YOU SO into the receiver.

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42
ted Says:
April 4th, 2008 at 1:24 pm
Thanks for the link on seattle jesse, its funny how all the western markets that used to be proof the whole region was immune to a correction have all started to fall. The build up in inventory we’re seeing in Vancouver right now is the first step here.

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43
Anonymous Says:
April 4th, 2008 at 1:30 pm
looks like Rob A. got pwnd
lol

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44
Olympics Says:
April 4th, 2008 at 1:42 pm
can anybody explain why people believe that RE should keep getting more expensive towards olympics and may crash only after the games? How are these two things connected?

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45
Shuma-Gorath Says:
April 4th, 2008 at 1:43 pm
^ patting yourself on the back just makes you look like even more of an insecure jackass Bob A…. fyi.

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46
Booya Says:
April 4th, 2008 at 1:53 pm
Olympics - you’re right, they aren’t connected. I want to pull out my hair and scream every time someone mentions the “obvious fact” that having the olympics will somehow permanently increase housing prices. There is no thought whatsoever behind those comments - it’s just “common sense” but ask someone why there should be any connection and you get a blank stare.

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47
DaMann Says:
April 4th, 2008 at 1:57 pm
Olympics

Prices will fall before the Olympics. The specuvestors all think they will be brilliant and unload right after the games. Smart money will be long gone before the first Gold medal is handed out.

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48
DaMann Says:
April 4th, 2008 at 1:59 pm
To quote a friend of mine ( kool aid drinker and amateur specuvestor) “Sell before the Olympics?, what are you an idiot?”

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49
Olympics Says:
April 4th, 2008 at 2:01 pm
DaMann, you are implying that there is a connection between RE and olympics- whether prices fall before or after is a separate question. I am trying to figure out why people think olympics has any influence on RE price levels? People who come to watch the games aren’t buying condos, are they? So what’s the connection???

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50
moldcity Says:
April 4th, 2008 at 2:08 pm
The connection is purely emotional, but thats enough of a driver for speculation. I think it makes some people feel special, the start using terms like ‘best place on earth’. Don’t get me wrong this is a fine little city, but lets be realistic, its not the ‘best place on earth’.

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51
DaMann Says:
April 4th, 2008 at 2:11 pm
Hype is the connection, that’s my point. All the specuvestors haven’t a clue what the games will do so they all think that for whatever reason prices will skyrocket until after the games. There are actually some morons who keep bantering on about the fact that they will be able to rent out their DT condo for $10k for the 2 weeks for the games. So overpaying by $300,000 is worth it to be able to rent it out for $10k for 2 weeks. So in a nutshell the morons think that stupid high rents for 2 weeks is a justification for 50% overvalue.

As well there are other not so bright thinkers that actually believe the world doesn’t know about Vancouver and after watching the games they will all flock here to live. Just like they did for Turin. You know Turin, the place everyone wants to live.

Actually I think a strong agrument can be made for why the Olympics will hurt RE prices here long term. Massive debt, bad press ( it will basically rain for 2 weeks and the world will be watching), Overbuilding.

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52
Drachen Says:
April 4th, 2008 at 2:13 pm
Olympics

Some people believe that they can kick out their tenants, rent their crappy 1 bedroom shoebox out for $25,000 for two weeks then sell at a profit.

The connection is people are stupid. The same crap was said about Expo 86, look where that went.

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53
moldcity Says:
April 4th, 2008 at 2:13 pm
In a way Vancouver is in a bit of an awkward adolescent phase. It’s too big to have the charm of a small city that it once had, but not big enough yet to have the impressive range of economic and cultural dynamics that happen in world class cities.

So for now we make do with economics based on pot and construction and most of the people that would add to the art and culture of the city move to where there’s more opportunity or the cost of living is lower.

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54
DaMann Says:
April 4th, 2008 at 2:15 pm
So in a nutshell there is no connection. The people I talk to are oblivious to the fact the this is/was a WORLD WIDE RE boom. They have no clue. If Vancouver was the only city in N. America to boom then maybe there was a factor of the games. The whole bloody world is/was booming and now correcting.

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55
Anonymous Says:
April 4th, 2008 at 2:18 pm
Shh! You’ll scare the specuvestors!

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56
Olympics Says:
April 4th, 2008 at 2:30 pm
ok, so the world comes here to crap for couple weeks and folks think it has effect on RE… Thanks for helping me understand this. Oh wait, i still don’t get it!

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57
Booya Says:
April 4th, 2008 at 2:48 pm
The fact that it even occurred to you to ask the questions means you “get it” far more than the average condo flipper!

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58
franko Says:
April 4th, 2008 at 2:52 pm
.
.
The only effect the Olympics have had on our economy was inflating construction costs of all those new condos. That’s all history, as the olympic portion of all that costruction is winding down, and those costly condos are not selling.

Our market will have crashed and bottomed by 2010, and looking for excuses to resume the uptrend.

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59
Rob A. Says:
April 4th, 2008 at 3:18 pm
I’m really looking forward to the Olympics. It’s going to be a fantastic two week party especially if you live downtown, where all the action is!

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60
Anonymous Says:
April 4th, 2008 at 3:27 pm
Right on Rob A. Good attitude. I’ll leave you to it though! too much traffic and crap for me, and I’m not into winter sports at all. I’ll be subletting out my rental for twice what I pay and going south to a warmer climate for the month, gotta love a good lease agreement!

Current score: 0

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